December 8, 2023

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Southwest CEO Bob Jordan is facing a giant crisis, 10 months on the job

The question that will hang over the company for a long time is why Southwest’s system crashed when other large airlines’ systems have held up relatively well. Analysts say Southwest’s network, which is very different from the hub-and-spoke system used by its peers, has made it difficult to restart operations.

But they also say Southwest technology, despite years of efforts to modernize it, has been missing. And Mr. Jordan will likely be asked why he hasn’t done more to make systems robust enough to handle the weather and technology disruptions that have roiled Southwest in recent years, including two mass flight cancellations and delays last year.

Although Mr. Jordan was CEO for a short time, he was a longtime member of Southwest’s senior leadership team, which would have given him plenty of opportunities to understand the company’s strengths and weaknesses. He started working for the company as a computer programmer, helped develop the frequent flyer program and helped integrate AirTran Airways’ planes and crews after that company was acquired by Southwest.

Robert W. Mann Jr., a former airline executive who now runs the consulting firm RW Mann & Company, said Mr. Jordan is “in the hot seat right now.”

But analysts were skeptical that South West could change quickly. They say the company’s management suffers from “Southwest exceptionalism,” or the firm belief that its unique approach to running an airline is the best. Although Southwest traces its origins to being a novice in dealing with sleepy incumbents, analysts say its decision-making can move at glacial speeds.

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“The airline has always been very cautious about change,” said Mr. Engel.

Southwest’s approach works well most of the time, and has contributed to the company’s strong financial performance over the past five decades, analysts say. It allowed, for example, that planes be used more quickly on their next flight. Old shareholders have done well. Southwest stock is up 217 percent over the past decade, outperforming the broader, best-performing stock market. But this month, Southwest’s stock performance is down about a fifth, and it’s outperforming the market and its peers.

There is no evidence that Mr. Jordan is weak. But poor crisis management has severely weakened other airline executives.